Option Contract on SE runner type peanuts – Option Pool Contract with a floor of $370 per ton with total option price of $15 per ton basis grade..

ZIMMER TALKS PEANUT MARKET AT GEORGIA PLANT FOOD MEETING

Karl Zimmer of Premium Peanut, LLC told ag leaders that “When trying to determine the future of the peanut market, understanding what is happening in China, India and Argentina is critical. Combined, these countries grow up to 10x as many peanuts as the United States. Most of the production of China and India is consumed domestically, mainly for oil, but each exports 800,000 – 1,000,000 tons annually, so they are key competitors for U.S. peanuts in markets such as Europe and Japan.”

China’s crop continues to grow, even though precise numbers are difficult to determine. This is driven by a dramatic trend in improved yields that started in 2006. With yields of ~1.4 tons / acre, even if the overall number of farmers and peanut acres grown declines, yields will continue to increase, and China will continue to have very large crops.

Even with a large crop, China is a potential, significant buyer of U.S. peanuts, both shelled and farmer stock. The price needs to be right, though. With a large portion of the 2017 U.S. crop contracted at $475/ton, the price is simply too high for the Chinese. At $475 contracted peanuts, China will wait for pricing to come down – either through purchasing of potential forfeitures, or lower-priced 2018 crop.

Chinese sales are needed to help with a large oversupply situation in the U.S. market. With no Chinese purchasing of 2017 crop, the U.S. may have a surplus of over 800,000 tons (3+ months) of the 2017 crop remaining in October 2018, creating issues for storage. Combined with redskin pricing having fallen back down to 2010 and 2015 low levels, expect option contracts for 2018 crop to be close to loan.

The good news for peanuts, peanut growers, and the market is that after the 2018 crop, we should see a reduction in supply. Cotton is expected to gain some type of price support for the 2019 crop, in the new farm bill – if not before. Combined with rotation pressure, and a bullish cotton market, expect a significant reduction in peanut acres starting with the 2019 crop.

Short-term (2017 and 2018 crops), expect large crops, excess supply, and low prices – globally. The good news with the U.S. 2017 crop is that due to the high quality, it can likely be shelled (and sold) longer than a traditional crop. If we can then find outlets for excess 2018 U.S. product, for example through sales to China, we could enter 2019 harvest with a balance between supply and demand. If cotton gains price support, and a reallocation or elimination of generic base, in the new farm bill, expect fewer acres of peanuts (and a more bullish market) starting with 2019 plantings.

U.S. PEANUT EXPORTS DOWN 29%

Record U.S. exports in 2016 saw exports decline in 2017 by almost 29%. The missing customer was China and Vietnam. Shipments to China dropped 70% from the previous year and Vietnam was down 88%. There were also major declines in the United Kingdom (down27%) and Spain down almost 20%. The favorite customers of the U.S. were Canada and Mexico, buying almost 50% of the U.S. peanut exports, and both recorded increases in 2017. The Dutch buyers returned to the U.S. peanuts after a decline in 2016. Germany and Japan posted increases and Denmark moved into the 10th top buyer replacing Norway

U.S. PEANUT PRODUCTION- 2017

Production was estimated at a record high 7.23 billion pounds, (3,616,800 tons) up 30 percent from 2016. Planted area was estimated at 1.87 million acres, up 12 percent from 2016. Harvested area was estimated at 1.78 million acres, up 16 percent from 2016. The average yield was estimated at 4,074 pounds per acre, up 440 pounds from 2016. Planted area for peanuts was estimated at its highest level since 1991. Harvested area increased in all States from last year, except for New Mexico. Production in 2017 was up from the previous year in all estimating States. In Georgia, growers realized the highest production on record. Record high production was also estimated in Arkansas and South Carolina. Record high yields were estimated in Arkansas, South Carolina, and Virginia.

DIRECT CONTRACT – Some shellers are offering $20 per ton above loan or about $375 per ton for un-contracted runner type peanuts

BIRDSONG PEANUTS COMMENTS ON CORPORATE CHANGES

On December 31st both Warren Birdsong and Jeff Johnson retired from Birdsong Peanuts after a combined 81 years of working for the company. We cannot thank them enough for their dedication to Birdsong Peanuts over the years. We will miss them and we wish them well in retirement. Jeff will stay on with the company as a consultant working on special projects related to health and nutrition.

Beginning January 1, 2018, the following changes will occur within the Company:

Ø Charles Birdsong will now serve as President of Birdsong Peanuts. Charles has been with the company for 25 years serving in various different capacities but most recently as Vice President of Operations and Procurement.

Ø Greg Harnish will now lead our sales team and serve as Executive Vice President of Sales and Marketing. Greg comes to Birdsong Peanuts after serving with Mars for 12 years and most recently as Vice-President of Mars Global Chocolate/Mars North America. Greg has been with Birdsong Peanuts since April 2017.

Ø Sally Wells will now serve as Vice President of Supply Chain and Corporate Logistics. Sally has been a key employee for Birdsong Peanuts since 2000 and she will work with Greg Harnish and the rest of the sales and marketing team on supply/demand planning, production forecasting and ensuring excellent customer service for our manufacturers.

Ø Gregg Grimsley will now serve as Vice President of Corporate Manufacturing. Gregg has been with Birdsong Peanuts since 2000 and he currently leads all of Birdsong’s shelling plants, oil mill and hull and pellet plants.

FARMER PAC PLANS REVERSE RAFFLE

The US Peanut Political Action Committee (PAC) has announced they plan to host a reverse raffle at the end of the Georgia Peanut Farm Show, January 18, 2018. Armond Morris, one of the organizers states, “Peanut farmers need to step up to the plate and be involved in the political process, NOW more than ever. Because of low commodity prices, the peanut program will have a cost this year and we need access to leaders in Washington so they understand the situation we face.” Tickets are $100 each with a goal of 300 to be sold. The final ticket in the reverse raffle will win $5,000. Tyron Spearman will be auctioneer and coordinator. To receive a ticket, call Armond Morris at 229-424-3527 or Spearman at 229-386-0216. Drawing about 3 PM at the Farm Show.